It's two o'clock in the morning, and I've got a stupid beer advert in my head. Three default blokes are in a club full of beautiful people. As one of them approaches the bar, the DJ stops playing so he can place his order sans voice strain. A smouldering blonde whisks him on to the dancefloor where a neon sign flashes "no small talk". As they leave, cuddly bouncers shelter them from the rain with umbrellas and a line of taxis appears from the dark, ready to whisk them home. "Carlsberg don't do nightclubs, but if they did … " and so on and so forth.

They missed by a mile. How about this instead: In the volcanic flatlands south of Mount Etna in Sicily, a stone-clad 19th-century wine-pressing warehouse sits in the middle of acres of blood orange groves. Couples relax on couches raised above the staggered antique barrel vaults stretching towards the ceiling. Outside, a stage enshrouded with vines faces a stone dance floor and a mixing desk squatting under an olive tree. Hundreds of people are dancing to one of the world's most famous DJs.

Screw the imaginary one in the advert … Mercati Generali is probably the best nightclub in the world.

But this isn't just my humble, wide-eyed opinion. Gilles Peterson has a reputation as the most far-sighted DJ in Britain, having hosted the BBC's Worldwide show for almost 10 years, simultaneously travelling the globe hunting for music and playing in the biggest and best nightclubs.

"It's probably my favourite club. It's a higher level of clubbing," he says, relaxing backstage before his set begins, booked to coincide with the club's 10th anniversary. "The owners are obsessive about creating an experience; from the food to the drinks to the environment. Some clubs can be in the best cities or part of the most exciting music scenes, but won't come close to this. Look at the place. It's incredible."

The palmento room PR
Before it became one of the world's most extraordinary clubs, Mercati Generali's central warehouse was a
palmento - a stone building in the heart of a vineyard where grapes would be crushed by foot into huge tanks. Production switched to blood oranges roughly 35 years ago, making the most of the rich volcanic soil that gives the fruit their distinctive, lava-coloured pigment.

The land belongs to the family of Diego Vespa, now the club's artistic director, who spent much of the 80s throwing illegal raves in the Sicilian countryside and around the base of Mount Etna. In 1998 he moved operations to the vacant palmento, and in the 10 years since it has garnered a reputation as one of the most multi-faced, forward thinking clubs in Italy. When not laying on international DJs, Mercati Generali hosts poetry slams, art exhibitions, and, occasionally, theatre.

Getting there involves a 20 minute taxi journey south from the centre of Catania, Sicily's second city on its eastern seaboard, through the residential reaches of the city and into the darkness marking the beginning of miles of fertile agricultural land that stretches south towards Syracuse. From the road, a long drive flanked by groves is lined with huge, squat Washington palms sprouting from the earth like giant pineapples.

When you arrive at the club's main outdoor area, everything is candlelit – a cacti garden facing the stage, a terraced eating area lined with baby orange trees, the old palmento with its exposed barrel vaults - save for a few spotlights lightly dousing the stage. The bar is loaded with local wines and spirits. Beyond it, a mulberry tree sprawls over a dim-lit chill-out area. Before the music gets going, light jazz drifts across the clearing marking out the dance floor; a soundtrack for the 80 or so people scattered across tables and chairs on the overlooking terraces.

Diego Vespa claims that Mercati's line-ups and reputation enables a kind of "natural selection on the door". There is a determinable class about everything that happens here. It looks like a secret rural hideaway for discerning cognoscenti, where dining is fine and drinks prices astronomical. If this was in London, I would never get in.

But there are few airs and graces here, despite the superlative setting. Good value cocktails and €7 (£5.50) wood-fired pizzas loaded with buffalo mozzarella and cherry plum tomatoes are ferried from the bar and kitchen by casually-dressed waitresses, swaggeringly Italian, but in a friendly way. Before the music gets going (usually midnight-ish) entry is free, and diners are as likely to be pre-clubbers as families. Kids up past their bedtime are scurrying around the grounds as their parents dine. Slowly, the crowds arrive. They are well-dressed, but far from snobbish. And, as on most nights, everyone is Italian.

By midnight, the live band is on, warming up for Peterson's set. Mark de Clive Lowe is one of the UK's most exciting jazz and soul acts, and here he is, playing to a crowd that have probably never heard of him on an open-air stage in a Sicilian orange grove. The booking agents and owners have a highly respectable contact book, and have a knack of putting on bands before they hit the big time. Manu Chao, Cat Power, Antony and the Johnsons, and Jamie Lidell have all played here in the past. Gilles Peterson makes a point of playing at least once a year.

"If Michelin turned their attention to clubs, Mercati Generali would get three stars, easy," he says, about to get up on stage. "It doesn't matter if I've just jumped off a plane or have been working non-stop for weeks, I get here and I feel reborn." High praise indeed. But over the course of the next four hours I buy it, totally. Under a starry Sicilian sky, Mr Peterson, reborn, blows us away.

Getting there

For upcoming listings, see mercatigenerali.org. From the city centre, do not pay more that €35 (£27) for a taxi. For boutique comfort, UNA Catania (unahotels.it) has doubles from €129 (£102) a night bed and breakfast. Alternatively, the Agora Hostel (agorahostel.com, €19pp a night) is a superb value option, connected to the liveliest bar in the city centre and on the doorstep of the old town's daily food markets.

Listen to Gilles Peterson's Worldwide show on Radio 1, Thursday mornings from 2am, or listen again on the show's BBC page. The Worldwide festival runs from July 3-6, based in Sète in the south of France.